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OECD/ITF Joint Transport Research Centre Discussion Papers

The International Transport Forum at the OECD is an intergovernmental organisation with 52 member countries. It acts as a strategic think tank for transport policy and organizes an annual summit of ministers. Our work is underpinned by economic research, statistics collection and policy analysis, often undertaken in collaboration with many of the world's leading research figures in academia, business and government. This series of Discussion Papers is intended to disseminate the International Transport Forum’s research findings rapidly among specialists in the field concerned.

How Should Transport Emissions Be Reduced?

Potential for Emission Trading Systems

In developed countries, transport generates approximately 25 to 30 per cent of emissions of CO2, the
main greenhouse gas (GHG) and these emissions are increasing sharply. There are two explanations for
the increase in emissions from transport: the first is dependency on the internal combustion engine for
transport with no wide-scale economically viable alternative available in the medium term; the second is
the sharp increase in vehicle-kilometres travelled, which seems to be an inherent feature of economic
development.
One might well ask, given announcements that oil reserves will run out rapidly, whether we should
not simply wait until reserves dry up to obtain a reduction in transport-related emissions. This said, rising
oil prices are gradually making it more viable to exploit unconventional reserves, leaving aside innovations
in technology which are reportedly opening up prospects for new fossil fuels (including fuels derived from
coal, which is in plentiful supply world-wide). Hence, there is every reason to believe that the use of fossil
fuels could continue on a large scale in the future.
Foresight studies show that if our aim is to achieve ambitious GHG emission control targets for
transport within the next few decades, the policies we implement will have to be more determined: among
other things, they should aim at reducing total consumption that is to say vehicle kilometres travelled, not
just unitary vehicle consumption (cf. ENERDATA and LEPII, 2005 for France, for instance).
Among the measures identified, carbon taxes and vehicle taxes are the most cost-effective (OECD,
2007; Parry et al., 2007). However, the “fuel tax protests” of September 2000 in several European
countries show that public opinion is very resistant to fuel tax increases (Lyons and Chatterjee, 2002).
This resistance can also be explained by concerns about fairness, since many households depend on the car
for day-to-day living and for getting to work. As well as this, fuel tax increases would require the
international harmonization of fuel taxation in different countries, which seeing what has happened in the
European Union appears to be extremely difficult.